| Since the Chinese "Reform and Opening Policy" was implemented, Chinese economy has been growing fast during the last 38 years. Many small companies grew into huge companies during this period. But as the Chinese economy growing, many problems have risen. Many companies suffer from the problem of excess production capacity or face the difficulty of improving market share in China. Since 2014, the economic growth rate of China has slowed down. Chinese economy has entered into a period of transformation. About how to pull through this period, it’s not only the problem of the country but also the problem of many companies.In recent years, more and more Chinese manufacturing enterprises are facing this kind of problem:The market share of their product has been lasting in a relatively high level for many years, especially for the industry leaders. If the company wants to grow, it needs to have a horizontal expansion or longitudinal expansion or both.Companies usually have two choices in respect of doing horizontal expansion. They may either grow at home or abroad. In the respect of growing at home, because the company has been running for many years in China, the brand loyalty of their products has formed. It will take them too much effort to expend the market share in China compared with the way of going abroad. So the way of going abroad has been the inevitable choice of many Chinese big companies, especially the industry leaders.If the enterprise chooses to open subsidiaries country by country, they will face many difficulties as they have are not famous there. It will take them too much time and effort So the more feasible and efficient way is to have a cross-border M&A towards a foreign famous company.Therefore, since 1993, Chinese companies have begun to merge and acquire companies. Especially in 2001, after China has entered WTO, China has witnessed a transnational M&A boom. For the last 3 years, the growth rate of Chinese companies’foreign investment has been exceeded 10%.Due to the short history of Chinese cross-border M&A, we need to learn some experience from foreign countries, especially Asian developed countries. Because we all face the difficulty of solving the culture gap problems between east and west companies in a cross-border M&A. Due to former studies, culture differences are the biggest problem in any cross-border M&A.In 1980s, Japan was experiencing the period of high economic growth. Japanese companies were facing similar macro-economic background. At 1989, Sony snapped up Columbia studios. This case is a classic example of successful cross-border M&A. Sony only opened global market but also accomplished the task of strategic expansion into movie field by this M&A case. After that, the position of Sony in movie field helped them to improve the sales of their electronic products.We choose two Chinese cross-border M&A cases and the Sony case to do a comparative analysis.We choose to study these cases by using some behavioral corporate finance theory. Former studies always study M&A by using traditional corporate finance theory. We want to make this article a little more innovative.This article is made up of 5 parts. The first part is introduction. The second part is case introduction. The third part is case study from traditional corporate finance theory. The fourth part is case study from behavioral corporate finance theory. The fifth part is summary and suggestion. The main conclusion and suggestion of this article is as follow.1. Based on "PEST" model, companies nowadays in China are quiet similar with companies in 90s’Japan. So we can learn some experiences from Japan’s M&A cases in 90s.2. Based on accounting analysis method, companies’ profiting ability and operational capability will decrease after the M&A. But those capabilities will rebound if the M&A is a good M&A. Those capabilities will stay at a low level if the M&A is a bad one.3. In the long term, Lenovo’s case and Sony’s case are successful. TCL’s case is failed. Solving the problems of culture integration and personnel changes is really important.4. Based on behavioral corporate finance theory, we found "Winner’s Curse" phenomenon in the 3 cases. Eastern companies often pay too much more to buy a famous western company. We eastern companies need to know the real target of this M&A and make good use of it.5. Based on behavioral corporate finance theory, TCL’s CEO had the problem of overconfidence, which may lead to the failure of the M&A case. We need to prevent this problem from happening.6. We should learn from Sony’s M&A case about their enterprise strategy.After all, I hope these suggestions can help companies in the future to have a successful M&A. |
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